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Let's talk about the popular Fidelity National Information Services, Inc. (NYSE:FIS). The company's shares saw a decent share price growth in the teens level on the NYSE over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Fidelity National Information Services’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What is Fidelity National Information Services worth?
According to my valuation model, Fidelity National Information Services seems to be fairly priced at around 5.36% above my intrinsic value, which means if you buy Fidelity National Information Services today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $136.72, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Fidelity National Information Services’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from Fidelity National Information Services?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double over the next couple of years, the future seems bright for Fidelity National Information Services. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in FIS’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on FIS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. While conducting our analysis, we found that Fidelity National Information Services has 3 warning signs and it would be unwise to ignore these.
If you are no longer interested in Fidelity National Information Services, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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